The implications of redefining poverty

How to define and measure poverty in the U.S. has long been an issue of debate. This is not an esoteric argument--most federal and state entitlement and benefit programs tie eligibility to need using the official measure of poverty. Any move to change the definition will have an effect on these programs and the families participating in them.

This week the Commerce Department announced the development of a new measure of poverty designed to be more nuanced than the existing measure. By including factors such as housing, child care, and health care costs, it is argued to be more representative of the actual pressures faced by today's families. However, this new measure has been rolled out as a "supplemental" measure and will not replace the existing poverty definition, which is based solely on food costs. Thus, the new measure will not have an impact on the eligibility rules for the thousands of federal and state programs aimed at low-income families.

What it might do, though, is illuminate just how well those programs are doing at meeting the goal of eradicating poverty. While the Commerce Department does not offer an opinion on whether the new measure will result in more or fewer families being defined as impoverished, a similar supplemental measure used in New York has resulted in higher poverty estimates in that city. Therefore, the new federal measure may well show that despite the passage of nearly 50 years since an American President first declared war on poverty, our poverty-alleviation policies have a larger target than we had assumed.

Increasing the visibility of the gap between who the state and federal governments will serve and who is truly in need might affect local governments in different ways. It might increase the pressure on local governments to fill that gap with locally-funded programs and services, which few local governments are in a position to do in the current budget climate. On the other hand, it might make it easier for the private and non-profit sectors to coordinate efforts with local government. Having a uniform definition of those in need, yet ineligible for certain government benefits, could allow charities and philanthropies to be more confident about stepping in where the need is greatest, without risk of supplanting public funds. A better picture of the gap may also allow for more efficient grant-making.

The first use of the new, supplemental poverty measure will be with the 2010 Census. Wisconsin's local governments would be wise to plan now for the potential impact to their budgets.